The IPO market in South Korea is expected to get a boost from two large offerings coming from the Samsung Group. The conglomerate’s subsidiary Samsung SDS on October 20 began bookbuilding for its planned IPO that could help it raise as much as US$1.1 billion, making it one of the largest IPOs out of the country.

Samsung SDS, which provides technology logistic services, is planning to sell some 6.09 million shares at a price of between 150,000 won (US$111.5) and 190,000 won per share. Domestic and international institutions are apportioned about 59% of the total offering or 3.6 million shares, while the rest will go to the retail tranche and employee share buyback programme.

The IPO is part of Samsung Group’s restructuring plan announced in April 2014 which observers say is intended for a smooth handover of the business from 72-year old chairman Lee Kun-hee, who was hospitalized in May 2014 after a cardiac arrest, to his son Lee Jae Yong.

At 150,000 won to 190,000 won per share, the company is valued at 20.3x to 25.8x its 2015 earnings, while on an Ebitda basis, the valuation stands at 8.2x to 10.7x.

This puts Samsung SDS on similar valuation as its close comparable SK C&C, which is currently trading at a 2015 PE multiple of 22.4x. The IPO valuation will put Samsung SDS slightly at a premium to Posco ICT, which is trading at a forward PE multiple of 16x.
The offering is expected to be completed by mid-November. The institutional bookbuilding is scheduled to last until October 31, while the retail tranche is anticipated to open on November 5, with listing planned on November 17.

Goldman Sachs, J.P. Morgan and Korea Investment and Securities are jointly managing the trade.

Meanwhile, Cheil Industries, widely considered the de-facto holding company for the Samsung Group, is expected to raise US$1.2 billion to US$1.4 billion in an IPO that is seen to be concluded by mid-December. The company is planning to sell about 20% to 25% of its holdings in the IPO, which will include both new shares and secondary units held by existing shareholders. Sources say some 10 million new shares will be issued in the offering, while its shareholders are expected to sell around 18.74 million shares.

Cheil is likely to sell the shares at a price ranging from 45,000 won to 55,000 won each and the IPO is set to conclude before Christmas, says a source close to the deal.

Citi and J.P. Morgan are managing the transaction.